In its latest report, Standard Chartered indicated that 2013 should bring a mild recovery for the Lebanese economy, barring net political risks. Accordingly, Lebanon would record a real GDP growth of 2.5% in 2013, up from the 1.5% foreseen for 2012.
According to Standard Chartered, GDP growth drivers in the country (retail demand, tourism, and construction) are volatile, final demand has been affected in 2012, but will gradually recover as resilience and adaptability prevail. According to Standard Chartered, even in a manageable geopolitical environment, tourism is forecasted to suffer in summer 2013, affecting also the construction sector.
Regarding the banking sector, the report considered it to be disconnected from the health of the real economy and the political environment. Indeed, it proved resilient to most political shocks, with low NPLs and loan-to-deposit ratios and available necessary ammunition to support the sovereign debt.
The budget deficit remains a source of worry, with subsidies, mainly those to Electricité du Liban, increasing by 63% year-on-year in the first seven months, and, amidst the inability to increase State revenues as a result of political paralysis. As to the bonds’ markets, Standard Chartered sees limited potential for spreads to tighten from current levels over the next few months.
Lebanon Weekly Monitor – Bank Audi Research